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|Merger Regulatory Update

Status of major filings/approvals:

FERC order approving merger issued 7/1/05

FERC approved the application as proposed with no surprises

New merger review provisions in Energy Policy Act of 2005 do not apply

Pennsylvania

PA Public Utility Commission approved settlement on 1/27/06

NRC approval received on 5/30/06

Department of Justice Hart-Scott-Rodino review

Agreement reached on 6/22/06, which resolves all competition issues considered
by the DOJ

New Jersey

Resumed settlement discussions in May

Made an enhanced offer to demonstrate significant merger benefits to New Jersey

Hope to conclude settlement talks soon

Final NJ Board of Public Utilities' decision expected later

Merger close anticipated in the third quarter 2006
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|Dec 2004

Q1 2005

Q2 2005

Q3 2005

Q4 2005

Q1 2006

Announce
Transaction

12/20/04

Shareholder
Approvals
7/05

FERC,
NJBPU,
PAPUC, ICC*
Regulatory
Filings

2/4/05

File Joint
Proxy
Statement

2/10/05

Work to Secure Regulatory Approvals

(FERC, DOJ, ICC*, PA PUC, NJ BPU, and others)

Develop Transition Implementation Plans

CLOSE
TRANSACTION

Beginning 1/17/05, Implement Nuclear Operating Services Agreement

Q2-Q3
2006

* Notice filing only

FERC
Approval
Order 7/1/05

NJ BPU
Hearings
Scheduled

NJ BPU Final
Decision
Expected

PA PUC
Settlement
Approval
1/27/06

Anticipated Merger Timeline

NJ
Settlement
Discussions

NJ
Settlement
Discussions
Scheduled

DOJ
Agreement
6/22/06

NRC
Approval
5/30/06
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|Market Concentration Mitigation

7/1/05 - FERC merger approval order

4,000 MWs fossil divestiture

2,600 MWs nuclear virtual divestiture

MDI selected as auction manager

LD product* sold as "Eastern Nuclear
Generation Aggregate (ENGA)"

6/22/06 - DOJ agreement

An additional 1,600 MWs fossil divestiture
(total ~5,600 MWs includes 6 specific plants)

No nuclear divestiture required

DOJ focused on elimination of specific units
that set market prices

Must reach definitive agreements with
buyers within 150 days of merger close

Merrill Lynch advising on sale

Comprehensive nature of DOJ agreement
ensures merger will not adversely affect
competition

Continuing to work with the NJ BPU


* LD product = liquidated damages product
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